U.S. President Donald Trump has expressed his determination to secure dominance in the Arctic, raising expectations that the domestic shipbuilding industry could benefit in the long term. This is because icebreakers capable of breaking through glaciers are essential for exploring resources and opening new routes in the Arctic, which suggests that orders for domestic shipbuilders will increase.
Currently, the country with the most influence in the Arctic is Russia. According to The Wall Street Journal (WSJ), Russia's Arctic bases have surged from 8 to 21 since 2005, while the number of bases among the 32 member countries of the North Atlantic Treaty Organization (NATO) including the United States has only increased from 31 to 33. Additionally, while Russia has 30 icebreakers, the U.S. operates only 3 icebreakers in the Arctic.
Trump has indicated his intention to expand influence in the Arctic, including expressing a desire to purchase Greenland, a territory of Denmark. He has also ordered the construction of additional large icebreakers.
◇ Icebreaker orders, difficult in the short term
Experts analyze that even if the United States shows interest in Arctic dominance, domestic shipbuilders are unlikely to benefit immediately. The Jones Act, established by the U.S. in 1920, mandates that vessels navigating the U.S. coastline must be built in the United States. It also stipulates that all cargo moving to and from U.S. ports must be transported solely on U.S.-flagged vessels manned by American crew. This law, in effect for over a century, has shielded the U.S. shipbuilding industry from foreign competitors but has also been criticized for diminishing domestic shipbuilding capabilities.
SK Securities analyzed in a report on the 5th that "unless the Jones Act is amended or exceptions are enacted, it is impossible for orders to come to Korean shipyards." It also noted, "Icebreakers are about 30%-50% more expensive than regular vessels, so it is better to utilize Russia's icebreaking services rather than purchasing them. It will be difficult to see a significant increase in icebreaker orders in the short term."
In July of last year, the U.S. signed an "Icebreaker Collaboration Efforts" agreement with Finland and Canada, which have icebreaker design technology. As a result, there is speculation that the U.S. may choose to receive technology transfers and build the vessels itself, rather than purchasing icebreakers from foreign shipyards, including South Korea.
◇ Possibility of amending the U.S. Jones Act... End of Russia-Ukraine war also a boon
Nevertheless, there is widespread opinion that the intensified Arctic power competition with U.S. involvement could be a boon for domestic companies in the long term. Firstly, there are growing calls to amend the Jones Act to enhance maritime competitiveness in the United States. The Heritage Foundation, a prominent U.S. think tank, stated in a 2023 report that "the Jones Act, which undermines the competitiveness of the U.S. shipbuilding and shipping industry, should be repealed."
Henry Haggard, a former U.S. Ambassador to South Korea and former Director of the Energy Department, argued shortly after Trump was elected last November that "the Jones Act should be amended to promote investment and technology cooperation from Korean shipyards to the U.S."
Trump also sent a ‘love call’ to South Korea instead of the icebreaker construction cooperation previously signed with Canada and Finland during the administration of his predecessor, Joe Biden. After being elected, he spoke with President Yoon Suk Yeol, saying, "I know that South Korea has world-class naval and shipbuilding capabilities. The U.S. shipbuilding industry needs South Korea's help.”
If icebreaker orders increase, companies expected to benefit include Hanwha Ocean and Samsung Heavy Industries. Hanwha Ocean has been building icebreaking liquefied natural gas (LNG) carriers since its predecessor, Daewoo Shipbuilding & Marine Engineering. Samsung Heavy Industries has experience collaborating with Russia's Zvezda Shipyard on the construction of icebreaking LNG carriers.
There are analyses that icebreaker orders could increase if the Russia-Ukraine war comes to an end. Before facing sanctions from Western countries due to the war, Russia was the largest customer for domestic shipbuilders. In 2021, Russia ordered 4 icebreakers each from Daewoo Shipbuilding & Marine Engineering and Samsung Heavy Industries.